Forensic Accounting: Assignment

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  • Topic: Claims adjuster, Barry Minkow, Fraud
  • Pages : 6 (1774 words )
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  • Published : January 10, 2013
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FORENSIC ACCOUNTING ASSIGNMENT
Organization: ZZZZ Best Co.
Insurance Restoration Project
Submission Date : 8/1/2013
Madam Sunita Lylia
BC300D
Group Name Muhammad Ariff Zainal Abidin| 1101107957|
Ahmad Afandy Ahmad Kamaruddin| 1101107704|
Derrick Remus Ttunzi| 1101107780|
|

Content Pages

Background…………………………………………………………………………………...

Introduction…………………………………………………………………………………..

Activities………………………………………………………………………………….......

List of Problems………………………………………………………………………………

Causes of Problem on Terms of Reference………………………………………………...... 1) Legal and Policy
2) Standard Operating Procedure
3) Moral and Ethical Values
4) Internal Control
5) Customers’ Satisfaction
6) Detection, Correction and Rehabilitation Actions
7) Recognition and Appreciation

Plan of Actions…………………………………………………………………………….. 1) Legal and Policy
2) Standard Operating Procedure
3) Moral and Ethical Values
4) Internal Control
5) Customers’ Satisfaction
6) Detection, Correction and Rehabilitation Actions
7) Recognition and Appreciation
Conclusion…………………………………………………………………………………. Refences……………………………………………………………………………………. Appendix………………………………………………………………………………….... Background

ZZZZ Best had started operations in the year of 1982 as a small, door-to-door carpet cleaning operation. A sixteen-year-old young talented entrepreneur, Barry Minkow who is the founder of the company, initially runs it out of his parents’ garage. ZZZZ Best experienced tremendous growth in both revenues and profits during the first several years of its existence. During the period from 1984 to 1987, the company’s net worth poured from less than $200,000 to more than $5 million on revenues of $50 million. Barry Minkow was introduced to the carpet cleaning industry at the age of twelve by his mother, who helped make ends meet by working as a telephone solicitor for a small carpet cleaning firm. Although there are many companies doing carpet cleaning industries out there, it is relatively easy to enter to the business as it requires minimal entrance for someone like Minkow. There are no barriers to entry such as no apprenticeships to be served, no licensing requirements and only a minimal amount of start-up capital needed. A simple business as this, Minkow had no problem to start his business as early as the age of sixteen. Minkow quickly realized that carpet cleaning was not an easy way to earn a livelihood. The fierce competitions in the industry with marginally profits restrain him to expand and to survive with his business. Bad checks, nagging vendors and customer complaints demanding payment obscured the young talented person. The challenge begins when he hardly had sufficient working capital and gaining loans from banks because of his age and the condition of his business. These situations turned up that the young entrepreneur came up with his own smart and innovative ways to finance his business by credit card forgeries, staging of thefts and check kiting to fleece his insurance company. Later on, his ‘creativity’ widens when his company indulges in the business relating to the insurance restoration projects.

Introduction

It was all begun when Barry Minkow widens his business into Insurance Restoration Project, where he gained a contact from an extensive social network of friends and acquaintances. These relationships he developed are mostly from the Swanky Los Angeles health club. The conspiracy started soon after becoming a friend of Tom Padgett, an insurance claims adjuster, came to seek for his help to grant and to confirm over the telephone to banks and any other interested third parties that Minkow’s company was the recipient of occasional insurance restoration contracts. All of the activities were totally fictitious. It was a method that Minkow falsified to generate fake paper profits and revenues to convince bankers to loan him money for his evil purposes, and he expanded his...
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